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Telkom, TBIG sign share swap deal in tower business
Telecommunications giant PT Telekomunikasi Indonesia (Telkom) and communication tower operator PT Tower Bersama Infrastructure (TBIG) announced on Friday a share-swap deal in which the two will exchange part ownership in their respective tower businesses
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elecommunications giant PT Telekomunikasi Indonesia (Telkom) and communication tower operator PT Tower Bersama Infrastructure (TBIG) announced on Friday a share-swap deal in which the two will exchange part ownership in their respective tower businesses.
Under the agreement, Telkom will swap its 49 percent stake in its subsidiary tower business PT Dayamitra Telekomunikasi (Mitratel) for 290 million new TBIG shares, which will account for 5.7 percent of TBIG's enlarged share capital.
After completion of the initial exchange, TBIG would take over management and consolidate Mitratel into its financial report, TBIG said in a statement published Friday.
Under the deal, Telkom has an option to exchange its remaining 51 percent stake in Mitratel within two years for 472.5 million new TBIG shares, which would increase Telkom's shares in TBIG to 13.7 percent.
Besides the equity stake in TBIG, Telkom will receive a cash consideration of up to Rp 1.73 trillion (US$141.54 million) in the event Mitratel achieves certain performance milestones.
The completion of the transaction, which remains subject to TBIG shareholders' approval, among others, is expected to close in the fourth quarter this year.
TBIG CEO Hardi Wijaya Liong said in a statement that the partnership with Telkom would scale up his firm's business.
'['¦] This partnership not only allows us to significantly add to the current scale of our business, both from a tenancy and revenue perspective, as well as our geographical footprint, but it also strengthens the business relationship between TBIG and the Telkom Group,' he said.
The share-swap deal, which is part of Telkom's strategy to become the country's largest operator, has come to fruition earlier than the firm's executive had targeted.
- Telkom will swap its 49 percent stake in Mitratel for 5.7 percent in TBIG
- Telkom has an option to increase its stake in TBIG to 13.7 percent
Telkom finance director Honesti Basyir said last month that his firm would use part of its capital expenditure to acquire a stake in the country's publicly listed telecommunication tower operators by the first quarter next year through a share-swap deal.
'We want to become the country's largest tower operator within the next three to five years,' he said.
Telkom spokesman Arif Prabowo said in a statement Friday that the partnership was expected to boost Mitratel's tower tenancy ratio.
Mitratel currently has a total of 3,928 telecommunication towers serving 4,363 tenants.
TBIG, meanwhile, has operated 11,266 telecommunication sites and served 18,028 as of June.
The sale of Mitratel's stake, including through the share-swap deal, had previously been criticized by the House of Representatives.
The House's Commission VI, which oversees state-owned enterprises, had previously argued that Telkom was not allowed to sell Mitratel without approval from the House.
Commission member Arif Minardi previously stated the sale of state assets valued over Rp 100 billion had to gain House approval.
'Although it hasn't been calculated yet, we assume that a 49 percent stake in Mitratel is worth trillions of rupiah. Hence, the company is obliged to request approval from the House,' he said, as quoted by kontan.co.id.
Recently, another mobile telecoms operator, XL Axiata Tbk, announced a plan to sell 3,500 communication towers to telecoms infrastructure firm Solusi Tunas Pratama Tbk in a Rp 5.6 trillion deal that would help it cut mounting debt.
